Crude oil prices last week have decreased the most they have since back in 2008, when American refineries were crippled in the wake of a massive hurricane, and Lehman Brothers went belly-up.
With crude prices below $100 per barrel for the first time in two months, experts expect that the price of gas can dip to $3.75 by Memorial Day weekend, and as low as $3.50 by midsummer. Don’t celebrate just yet however, as experts say that oil prices are bound to spike again, as the global market fundamentals have not changed.
“There’s a herd instinct, but this is a correction and not a shift in trend,” said Allen Sinai, chief global economist and president of Decision Economics, who characterized the drop in commodity prices this week as “a temporary and transitory reversal.”
Conditions in the Middle East are certainly no friend to American gas prices, as the continuing turmoil there threatens oil-related infrastructure. On top of that, OPEC member nations seem to like higher prices, and Libya, producer of some of the most sought after crude in the world, remains out of the global marketplace.
On the other side of the coin, the economies of China, India, and other emerging markets continue to rapidly grow and increase demand.
“After an incredible run straight up, this is a correction on concerns about world economic growth,” Mr. Sinai cautioned. “Nothing has changed, except psychology and taking profits.”
Enjoy the savings while they are to be had – they are surely here for only a brief moment.
– By: Stephen Calogera